FxWirePro: AUD/USD Interim Bulls Exhausted In Consolidation Phase – Trade & Hedging Setup

AUDUSD spiked from the lows of 0.5506 to the recent highs of 0.7064 levels, but now showed the failure swings, currently trading at 0.6885 levels which is well below 21-DMAs.

Upswings above 7, 21 & 100-DMA with bullish crossovers have extended the minor uptrend but now seem to be exhausted as the bears resume upon overbought pressures & failure swings at stiff resistance of 0.7050 – 0.7070 levels (refer daily chart), the minor uptrend likely intensify only upon decisive breakout above this stiff resistance zone, while both leading oscillators show overbought pressures.

The consolidation pattern continues, but a break below 0.6800 would indicate further downside potential.

On a broader perspective, although interim bulls extended but restrained at the stiff resistance areas of 0.7070 levels & 21-EMAs, bears to drag price slumps on breakdown below double top neckline, major downtrend remains intact as both leading & lagging indicators (except stochastic) are indecisive but seem to be bearish bias.

Trading tips:

On a short-term trading purpose, tunnel spreads are best suitable, so snap the deceptive rallies to deploy higher strikes in the binary puts while shorting lower strikes simultaneously. Long puts with upper strikes of 0.6975 and short put with lower strikes at 0.6750 levels.

Alternatively, at this juncture, contemplating major downtrend, on hedging grounds we recommend shorting next-month month futures as the underlying spot FX likely to target southwards (at around 0.6650 levels) in the medium run.

Writers in a futures contract are expected to maintain margins in order to open and maintain a short futures position.